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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
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FORM 11-K
(Mark One)
/ X / Annual Report Pursuant to Section 15(d) of the Securities Exchange Act
of 1934
For the period ended September 1, 2001 Commission file number 1-9553
OR
/ / Transition Report Pursuant to Section 15(d) of the Securities Exchange
Act of 1934
CBS EMPLOYEE INVESTMENT FUND
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(Full title of the plan)
VIACOM INC.
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(Name of issuer of the securities held pursuant to the plan)
1515 Broadway
New York, New York 10036
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(Address of principal executive offices)
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CBS EMPLOYEE INVESTMENT FUND
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TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits
As of September 1, 2001 and December 31, 2000 2
Statement of Changes in Net Assets Available for Benefits
For the Period January 1, 2001 through September 1, 2001 3
Notes to Financial Statements 4-12
SUPPLEMENTAL SCHEDULE:
Schedule of Reportable Transactions For the
Period January 1, 2001 through September 1, 2001 S1
All other schedules are omitted as not applicable or not required.
Exhibit:
I. Consent of Independent Accountants
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
persons who administer the Plan have duly caused this annual report to be signed
on its behalf by the undersigned, here-unto duly authorized.
CBS Employee Investment Fund
By: /s/ Barbara Mickowski
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Barbara Mickowski
Member of the Retirement Committee
INDEPENDENT AUDITORS' REPORT
To the Plan Administrator of the
CBS Employee Investment Fund
We have audited the accompanying statements of net assets available for benefits
of the CBS Employee Investment Fund ("the Plan") as of September 1, 2001 and
December 31, 2000, and the related statement of changes in net assets available
for benefits for the period January 1, 2001 through September 1, 2001. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly, in
all material respects, the net assets available for benefits of the Plan as of
September 1, 2001 and December 31, 2000, and the changes in net assets available
for benefits for the period January 1, 2001 through September 1, 2001 in
conformity with accounting principles generally accepted in the United States of
America.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedule of reportable
transactions is presented for the purpose of additional analysis and is not a
required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule has been subjected to the auditing procedures
applied in the audit of the basic financial statements for the period January 1,
2001 through September 1, 2001 and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
Mitchell & Titus, LLP
Philadelphia, Pennsylvania
February 22, 2002
CBS EMPLOYEE INVESTMENT FUND
Statements of Net Assets Available for Benefits
As of September 1, 2001 and December 31, 2000
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(in thousands)
2001 2000
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ASSETS
Investments:
Investments, at fair value $ - $ 789,482
Investments, at contract value - 381,207
Loans to participants - 16,751
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Total investments - 1,187,440
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Employer's contributions receivable - 991
Employees' contributions receivable - 969
Interest and dividends receivable - 80
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Total assets - 1,189,480
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LIABILITIES
Payable to brokers for unsettled trades - 1,850
Other liabilities - 522
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Total liabilities - 2,372
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Net assets available for benefits $ - $ 1,187,108
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The accompanying notes are an integral part of these financial statements.
2
CBS EMPLOYEE INVESTMENT FUND
Statement of Changes in Net Assets Available for Benefits
For the Period January 1, 2001 through September 1, 2001
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(in thousands)
ADDITIONS
Contributions:
Employer $ 10,775
Employee 26,910
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37,685
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Investment income:
Dividends 1,219
Interest 17,565
Net (depreciation) of investments (87,007)
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Investment income, net (68,223)
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Transfers from King World Productions, Inc. Retirement
Savings Plan 21,907
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Total additions (8,631)
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DEDUCTIONS
Benefits paid to participants 55,744
Administrative expenses 766
Transfers to Viacom 401(k) Plan 1,121,967
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Total deductions 1,178,477
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Net (decrease) (1,187,108)
Net assets available for benefits, beginning of year 1,187,108
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Net assets available for benefits, end of year $ -
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The accompanying notes are an integral part of these financial statements.
3
CBS EMPLOYEE INVESTMENT FUND
Notes to Financial Statements
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1. DESCRIPTION OF THE PLAN
The CBS Employee Investment Fund ("the Plan") was established by CBS
Broadcasting Inc. (the "Company") (formerly CBS Inc.) a wholly owned
subsidiary of CBS Corporation (the "Corporation" or "CBS") (formerly
conducted business as Westinghouse Electric Corporation). On May 4, 2000,
CBS was merged with and into Viacom Inc. ("Viacom"). Viacom became the
sponsor of the Plan effective with the merger. The Viacom Retirement
Committee serves as the plan administrator.
The Plan was established to provide a convenient way for employees of the
Company to save and invest for retirement. The Plan is considered a defined
contribution type of profit sharing plan and, is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA).
Plan Mergers and Amendments
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Viacom 401(k) Plan Merger
Effective after the close of business on August 31, 2001, the assets and
liabilities of the Plan merged into the Viacom 401(k) Plan, and the Plan
ceased to exist as a stand-alone plan. Certain provisions of the Viacom 40l
(k) Plan differ from those provisions of the Plan that were effective prior
to the merger. Participants should refer to the Viacom 401 (k) Plan
document, as amended effective September 1, 2001, for provisions applicable
to Plan participants.
Other
Effective January 1, 2000, the Plan was amended to allow all active
employees of the Westinghouse Savings Program, another qualified plan
sponsored by the Company, to become participants of the Plan.
Effective January 1, 2000, the Plan was amended to provide for certain
participants of the Plan to be transferred to the Infinity Broadcasting
Corporation Employees' 401(k) Plan, another qualified plan sponsored by a
Viacom subsidiary.
Effective January 1, 2001, the Plan was amended to merge the King World
Productions, Inc. Retirement Savings Plan (King World) into the Plan. On
January 2, 2001, assets for 155 King World participants were transferred to
the Plan.
Plan Provisions
---------------
The following is a brief description of certain provisions of the Plan,
effective prior to the merger with the Viacom 401(k) Plan. Participants
should refer to the Plan document for the complete Plan provisions.
4
CBS EMPLOYEE INVESTMENT FUND
Notes to Financial Statements
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1. DESCRIPTION OF THE PLAN (continued)
Eligibility
All employees of the Company and certain of its subsidiaries in the United
States, as well as U.S. citizens abroad, who are employed on a full-time
basis in executive, non-union office and hourly positions, are eligible to
participate in the Plan immediately. Employees working on a part-time basis
are eligible to participate in the Plan upon the completion of one year of
employment, if the employee worked at least 1,000 hours in that year. Other
groups designated by the Company or by the terms of a collective bargaining
agreement are also eligible to participate in the Plan.
Investment Options
Pursuant to the May 4, 2000 merger between CBS and Viacom, each share of
CBS common stock held by the Plan was converted into 1.085 shares of Viacom
Class B Common Stock.
On February 14, 2001, Infinity Broadcasting Corporation merged into Viacom.
Pursuant to the merger, each share of Infinity stock held in the Infinity
Stock Fund was converted into 0.592 of shares of Viacom Class B Common
Stock.
The Plan had eleven investment options, which were: Stable Value Fund,
Short Term Life Cycle Fund, Medium Term Life Cycle Fund, Long Term Life
Cycle Fund, S&P Index Fund, Active U.S. Equity Fund, Small Cap U.S. Equity
Fund, International Equity Fund, Company Stock Fund, Infinity Stock Fund
and the Self-Directed Account.
As a result of the merger of the Plan with the Viacom 401(k) Plan, any
amounts previously designated for investment in the Active U.S. Equity and
the International Equity Funds were transitioned into the Barclays Global
Investors S&P 500 Index and Capital Guardian International Equity Funds,
respectively.
Employees are allowed to transfer balances among any of the fund options in
increments of 1%.
The Self-Directed Account allows Plan participants to establish an
investment account with the trustee and gain access to an expanded number
of investment options. A Self-Directed Account can be established if the
participant has a Plan balance of at least $5,000; the minimum initial
investment option is $2,500. Additional transfers into the Self-Directed
Account must be in $1,000 increments. Fees are charged on transactions in
the Self-Directed Account and are charged directly against the
participant's Self-Directed Account balance.
5
CBS EMPLOYEE INVESTMENT FUND
Notes to Financial Statements
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1. DESCRIPTION OF THE PLAN (continued)
Participant Loans
Additionally, the Plan maintains a Loan Provision Fund for outstanding
participant loans as discussed below.
The Plan allows employees to request loans from their account without
incurring a taxable event. Participants may request loans for a minimum of
$1,000, but not to exceed the lesser of $50,000 (reduced by the highest
outstanding balance of any loan from the Plan during the prior twelve
months) or one half of the market value of the vested portions of all the
participant's separate accounts on the date of the loan. No more than one
loan may be made per year, and not more than two loans may be outstanding.
When a participant has two loans, one of the outstanding loans must be for
the purpose of purchasing a primary residence.
Interest on participants' loans are based on the latest blended rate for
the Stable Value Fund, rounded to the nearest quarter percentage point, as
of the valuation date of the calendar quarter preceding the loan's
effective date. The loans must be repaid within five years, with the
exception of a loan used to acquire a primary residence, for which
repayment is not to exceed fifteen years. In the event of default on a loan
payment, all remaining payments are considered immediately due and payable.
The defaulted portion of any outstanding loan including accrued interest is
offset against the remaining balance in the participant's account.
Contributions
Employee participation in the Plan is voluntary. Employee contributions can
be between 1% and 15% of base annual salary on a before or after-tax basis.
Employees may contribute, on a before-tax basis, up to a maximum of
$10,500. Participants may also make additional voluntary lump sum
contributions on an after-tax basis. Employee contributions are directed by
participants to any combination of funds, as designated by the employee.
Allocations to the funds may be made in 1 percentage point increments.
The Company may make performance based discretionary contributions to the
Plan. Company matching contributions are based on employees' before-tax
contributions (up to a maximum of 5% of eligible pay). In 2001 and 2000,
the Company match equaled 50% of each $1.00 contributed on a before-tax
basis up to 5% of eligible pay. Employer contributions are initially
directed to the Company Stock Fund. Employees can subsequently transfer the
employer contribution, in increments of 1% to any of the fund options.
6
CBS EMPLOYEE INVESTMENT FUND
Notes to Financial Statements
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1. DESCRIPTION OF THE PLAN (continued)
Contributions (continued)
Company contributions become vested at the rate of 33-1/3% per annum until
fully vested after three years of employment.
The overall maximum annual contribution to the Plan for a participant,
including before-tax, after-tax and Company matching contributions is
$30,000 or 25% of an employee's base pay. All employer and employee
contributions are subject to specified limitations as described in ERISA
and other applicable federal and state laws.
Distributions
Upon termination, most participants have the option of receiving the
balance in their accounts in cash, monthly or annual payments over a period
of time not to exceed 240 months. For terminated participants, who have an
account balance in excess of $5,000, an option is available to leave their
account balance in the Plan and have it distributed at any valuation date
provided however, that payments commence no later than April 1, of the year
following the year in which they reach age 70 1/2. Terminated participants
with account balances of less than $5,000 receive a mandatory lump sum
payment.
Non-vested employer contributions are forfeited upon termination and are
used to reduce future employer contributions and for plan expenses. At
September 1, 2001 and December 31, 2000, forfeited non-vested amounts were
$181,758 and $180,406, respectively.
Withdrawals of a participant's after tax contributions account are
permitted at any time, but are limited to two withdrawals per calendar
year.
Withdrawals of a participant's tax-deferred contributions are permitted
after the participant has reached age 59-1/2, or before reaching such age
in the event of hardship, but are limited to two withdrawals per calendar
year.
The Tax Reform Act of 1986 imposed a 10% penalty on certain withdrawals and
distributions made before the participant reaches age 59-1/2.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
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The financial statements of the Plan have been prepared under the accrual
method of accounting.
7
CBS EMPLOYEE INVESTMENT FUND
Notes to Financial Statements
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2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Basis of Presentation (continued)
---------------------
As a result of the merger of the Plan with the Viacom 401 (k) Plan, the
financial statements presented are as of September 1, 2001 and for the
period January 1, 2001 through September 1, 2001.
Investment Valuation
--------------------
An individual participant's interest in the funds of the Plan is
represented by the dollar value of the participant's individual account.
Investments, except for certain guaranteed annuity and investment
contracts, are stated at fair value. Investments in securities traded on a
national securities exchange are valued at the closing sales price on the
last business day of the year; securities traded in the over-the-counter
market and listed securities for which no sale was reported on that date
are valued at the last reported bid price; participations in pooled trust
funds are stated at the Trust's beneficial interest in the aggregate fair
value of assets held by the particular fund as reported by the Plan's fund
manager. The carrying value of the Plan's investment in the guaranteed
annuity contracts and guaranteed investment contracts is cost plus accrued
interest.
Investment Transactions and Investment Income
---------------------------------------------
Purchases and sales of securities are reflected on a trade-date basis. Gain
or loss on sales of securities is based on average cost.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
The net appreciation (depreciation) of investments, consists of the
realized gains and losses and the unrealized appreciation (depreciation) on
those investments, as reflected in the Statement of Changes in Net Assets
Available for Benefits.
Payment of Benefits
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Benefits are recorded when paid.
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
Plan Administrator to make estimates and assumptions that affect the
reported amounts and disclosures. Accordingly, actual results could differ
from those estimates.
8
CBS EMPLOYEE INVESTMENT FUND
Notes to Financial Statements
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3. INVESTMENTS
Investments held by the Plan as of September 1, 2001 and December 31, 2000
are summarized by their fair and contract values in the following table:
September 1, December 31,
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2001 2000
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(in thousands)
Investments at Fair Value as Determined
by Quoted Market Prices
Common stocks $ - $ 203,871 (A)
Preferred stock - 637
U.S. Government securities - 4
Fixed Income -
Registered investment companies - 104,506
Investments at Estimated Fair Value
Common collective trusts - 480,464
Investments at Contract Value
Value of interest in unallocated
insurance contracts - 381,207
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$ - $ 1,170,689
=================== ==================
(A) Includes common stock of related parties, Viacom ($170,657) and
Infinity Broadcasting Corporation ($15,563) in 2000.
Investments that represent 5 percent or more of the Plan's Net Assets are
listed in the following table:
September 1, December 31,
------------------- ------------------
2001 2000
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(in thousands)
Viacom Inc. Class B Common Stock $ - $ 170,657
Barclay Equity Index Fund - 420,766
State Street Bank and Trust - 65,393
9
CBS EMPLOYEE INVESTMENT FUND
Notes to Financial Statements
--------------------------------------------------------------------------------
3. INVESTMENTS (continued)
The net (depreciation) in the fair value of investments is summarized as
follows:
Period
January 1, 2001 -
September 1, 2001
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(in thousands)
Investments at Fair Value as Determined
by Quoted Market Prices
Common stocks $ (22,300)
Registered investment companies (62,288)
Investments at Estimated Fair Value
Common collective trusts (2,419)
-----------------
$ (87,007)
=================
The Plan has a number of benefit-responsive investment contracts with
certain insurance companies. At September 1, 2001 and December 31, 2000,
the Plan held $0 and $381 million, respectively, of unallocated insurance
contracts. These contracts are recorded at their contract values. The
relevant contract and fair value information for insurance contracts held
at December 31, 2000 is summarized below:
December 31, 2000: (in thousands)
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Effective Interest Contract Fair
Investment Contracts Date Rate Value Value
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Allstate Life Ins. Co. 01/08/98 6.04% $ 48,684 $ 48,424
Allstate Life Ins. Co. 08/16/96 6.67% 10,532 10,550
JP Morgan Chase 06/10/99 6.66% 38,261 39,700
John Hancock Life Ins. (Fixed) 12/01/95 6.00% 7,489 7,480
John Hancock Life Ins. (Variable) 06/10/97 5.27% 9,051 8,940
John Hancock Life Ins. 03/05/98 5.84% 29,222 29,506
John Hancock Life Ins. (MBIA) 01/13/99 6.00% 23,717 23,686
Monumental Life Ins. Co. 07/01/00 6.65% 29,935 29,982
New York Life Ins. Co. 07/01/94 7.25% 4,574 4,656
New York Life Ins. Co. 09/08/94 7.35% 8,761 8,969
New York Life Ins. Co. (MBIA) 01/13/99 7.25% 14,455 14,710
Prudential (MBIA) 06/30/95 6.26% 35,120 35,204
State Street Bank & Trust 08/19/98 6.39% 65,393 66,309
UBS AG 11/22/99 6.89% 56,013 56,544
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Total $ 381,207 $ 384,660
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10
CBS EMPLOYEE INVESTMENT FUND
Notes to Financial Statements
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4. TRANSFERS TO THE VIACOM 401 (K) PLAN
Effective after the close of business on August 31, 2001, the Plan was
merged into the Viacom 401 (k) Plan. The net assets transferred to the
Viacom 401 (k) Plan consisted of the following:
Assets
Investments, at fair value $ 702,719
Investments, at contract value 404,058
Loans to participants 17,291
Other receivables 67
Cash 2,578
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Total Assets 1,126,713
Liabilities 4,746
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Net assets transferred to
Viacom 401 (k) Plan $ 1,121,967
===============
5. TAX STATUS
Prior to the merger of the Plan with the Viacom 401 (k) Plan, an
application for a new determination letter for the Plan was filed with the
Internal Revenue Service. The Internal Revenue Service determined and
informed the Company by a letter dated December 18, 2001, that the Plan was
designed in accordance with applicable sections of the Internal Revenue
Code ("IRC").
Participants were not subject to income tax on contributions made on their
behalf by the Company nor on the plan earnings credited to their account
until such time as they withdraw all or any part of their accumulated
balance.
11
CBS EMPLOYEE INVESTMENT FUND
Notes to Financial Statements
--------------------------------------------------------------------------------
6. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements to Form 5500:
September 1, December 31,
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2001 2000
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(in thousands)
Net assets available for benefits per the financial
statements $ - $ 1,187,108
Amounts allocated to withdrawing participants - (243)
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Net assets available for benefits per Form 5500 $ - $ 1,186,865
================== ====================
The following is a reconciliation of benefits paid to participants per the
financial statements to Form 5500:
Period
January 1, 2001 -
September 1, 2001
-----------------
(in thousands)
Benefits paid to participants per the financial statements $ 55,744
Less: Amounts allocated to withdrawing participants
during the previous year ended December 31, 2000 (243)
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Benefits paid to participants per Form 5500 $ 55,501
=============
Amounts allocated to withdrawing participants are recorded on Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, but not yet paid as of that date.
7. PLAN TERMINATION
Effective after the close of business on August 31, 2001, the Company
elected to merge the Plan's assets and liabilities into the Viacom 401 (k)
Plan and the Plan ceased to exist as a stand-alone plan. Although the
Company has not expressed any intent to terminate the Viacom 401(k) Plan,
it is free to do so at any time, subject to the provisions of ERISA. In the
event of termination, participants will become 100% vested and the net
assets of the Plan shall be allocated among the participants and their
respective beneficiaries of the Plan in the order provided for in ERISA.
12
CBS EMPLOYEE INVESTMENT FUND
Schedule of Reportable Transactions
For the Period January 1, 2001 through September 1, 2001
------------------------------------------------------------------------------------------------------------------------------------
(a) Identity of Party Involved (c) Purchase (d) Selling (g) Cost of (i) Net
(b) Description of Asset Price Price Asset Gain
---------------------------------------- ----------------- ------------- ------------- ------------
VIACOM, INC. CLASS B COMMON STOCK 42,350,187 - - -
VIACOM, INC. CLASS B COMMON STOCK - 43,287,681 36,753,318 6,534,363
TBC INC. POOLED EMPLOYEE FUNDS
DAILY LIQUIDITY FUND 186,717,185 - - -
TBC INC. POOLED EMPLOYEE FUNDS
DAILY LIQUIDITY FUND - 178,789,717 178,789,717 -
BARCLAY EQUITY INDEX FUND 26,688,919 - - -
BARCLAY EQUITY INDEX FUND - 34,195,629 28,146,566 6,049,063
S1
EXHIBIT I
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation, by reference in the registration
statement (No. 333-36440, 333-88613 and No. 333-55346) on Form S-8 of Viacom
Inc., of our report dated February 22, 2002, included in the Annual Report of
the CBS Employee Investment Fund on Form 11-K for the period ended September 1,
2001.
Mitchell & Titus, LLP
Philadelphia, Pennsylvania
February 27, 2002